A conversation with a fiscal conservative

Senator Chuck Schumer (D-NY) was on CNN yesterday (Jan. 30, 2011). He opined that Republican talk of shutting down the government by refusing to raise the federal debt ceiling was gross irresponsibility. He argued that would cause much human suffering and could lead to damage to the U.S.'s credit rating.

Indigenous southern California wildlife

That was preceded the day before by the following conversation with a fiscal conservative (FC). Paraphrasing:
FC: I hope that people in congress block a debt ceiling increase.
Calmoderate: Huh? That would be grossly irresponsible. That would cause much human suffering. We need to ease our way back to fiscal sanity to minimize collateral pain and damage.
FC: I disagree. What if our economy collapses before we ease out? That would lead to even more suffering. Politicians spend irresponsibly to buy votes and get reelected, we are now deep in debt partly, maybe largely, because of that irresponsible spending. I see nothing that changes that. I don't believe we can ease our way out. If things spin out of control, we could be in trouble we cannot get out of without horrendous collateral damage.
Calmoderate: Hm. You have a point or two there.
FC: I liked what Arnie (former governor Schwarzenegger) tried to do and did. He got blocked in focused cuts so he just tossed out an across the board cut, a 10% decrease I think it was. At least that got through the idiot legislature and maybe had some impact.
Calmoderate: What about 1994 when the Republicans tried to shut down the federal government and got whacked by voters?
FC: That was then and this is now. I do not think there will be the same kind of backlash. Even if there is, that's OK. People in congress need to do their jobs and if that means they get kicked out of office, then that's just what happens. People like me are angry and want restraint right now. If we can't do it in a smart, focused way like Arnie tried but failed to do, then I want a meat axe used to hack off big chunks of government, including the military, social entitlement programs and every other sacred special interest ox there is. We are way over extended and can't support it any longer.

Shifting sands

This vignette got me to thinking. America's economy is complex and dynamic. Nobody sees our economy the same way, not even experts like the financial crisis inquiry commission can agree on much. It is under financial stress. It is unclear how close to real disaster we are. Maybe the economic recovery can save us by leading to increased tax revenues. But, maybe that will come too late to avoid catastrophe. When things in the economy turn sour, they can go south real fast. Remember how fast we came to the verge of collapse in the 2008 financial meltdown? When things go bad, they can go there fast.

Moody's is warning that time is running out and America's federal credit rating just might get reassessed and downgraded. If that happens, we could be in real trouble with no way out except by taking a massive collateral damage hit. If we refuse to raise the debt ceiling, that should bolster our credit rating, not impair it like Sen. Schumer argues.

Wild turkey!

Maybe my friend FC has it right. Better to take a bad hit now, than a horrendous hit later. Maybe time has just about run out. Either way, some politicians will pay the price of allowing us to get into this mess in the first place. That would be more than just fine with me.